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There are two distinct sides when it comes to cryptocurrency’s role in the marketplace. On side is adamant about its value. The other side does not really understand what it is all about. This carries over to investors looking to get into the crypto game.
Goldman Sachs has some distinct views about cryptos as a valid investment. They were released ahead of a recent investor call. They were also covered in a recent post on www.cnbc.com . A basic summary of these views is as follows:
Crypto supporters were disappointed in the company’s stance. They were hoping the major investment firm would make a case for bitcoin as an investment strategy. This put the crypto evangelists in direct odds against Goldman Sachs’ viewpoint.
Goldman Sachs is clear on its view that bitcoin does not make its case as an investment tool. Crypto evangelists were also quick to dispute this claim. The presentation was examining the impact of the coronavirus on the US economy. It also addressed bitcoin and other virtual currencies.
The slide deck detailed several reasons why cryptos should not be considered an asset class. Cryptos do not generate cash flow. They were compared to bonds and corporate earnings’ ability to create global economic growth.
“We believe that a security whose appreciation is primarily dependent on whether someone else is willing to pay a higher price for it is not a suitable investment for our clients.”
Also added in the deck was the quote:
“We also believe that while hedge funds may find trading cryptocurrencies appealing because of their high volatility, that allure does not constitute a viable investment rationale.”
Industry analysts have noted increased interest in cryptos from institutional investors such as hedge funds. Aiding this stance is hedge fund veteran Paul Tudor Jones. He recently stated that almost two percent of his fund’s assets are in bitcoin.
One of the most vocal objections came from the co-founders of the crypto exchange Gemini. Cameron Winklevoss is one half of the team along with his twin brother. He released the following tweet:
“Hey Goldman Sachs, 2014 just called and asked for their talking points back. Bitcoin was declared a commodity by the CFTC in 2015 in the Coinflip order…so yea it’s an asset whose price is set by supply and demand. Just like gold. Just like oil. It’s a commodity.”
Tyler Winklevoss went on to tweet:
“The more I think about it, the Goldman report is probably a head fake. Seems like something the vampire squid would do. They’re probably rebranding to ‘Goldman Stacking Stats’ as we speak.”